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Grouped proceedings in the Federal Court

In February 1977 the Attorney-General referred to the ALRC matters relating to the access of citizens to courts.

The final report, Grouped Proceedings in the Federal Court (ALRC Report 46), was tabled in federal Parliament in December 1988.

ALRC Report 46 reported that the high cost of legal proceedings effectively prevented individuals and businesses who had suffered significant but small losses from claiming compensation for those losses.

Allowing a number of related claims to be dealt with in a single proceeding would reduce costs for the benefit of both sides and would ensure the most efficient use of legal resources.

ALRC Report 46 concluded that a new grouping procedure had a number of advantages including cost effective enforcement of rights and consistency of determinations.

Key recommendations

A new form of grouped proceedings for claims arising out of similar material facts should be established.

Grouped proceedings should operate on an 'opt out' basis and should allow claims for damages.

A group member should be immune from paying the respondent's costs except where they had conducted their own proceedings. Principal applicants should be encouraged to bring group proceedings by allowing contingency fees to be arranged with solicitors and by establishing a special fund to finance grouped proceedings.

Implementation

The federal Government has implemented the Australian Law Reform Commission's recommendations, with some modification, by way of the Federal Court of Australia Amendment Act 1991 (Cth), which enables a person to bring a proceeding on behalf of a group of persons where their claims are related and have common issues. They are referred to as 'representative proceedings'.

The proceedings are of an 'opt out' nature so that members of a group do not have to give their written consent prior to the proceedings commencing, but all members of a group will be bound by the outcome of a proceeding unless they opt out of the proceeding.

The provisions covering representative proceedings are contained in Part IVA of the Act, and are increasingly being used.

The Act did not implement the Commission's recommendations on costs and this has been a major criticism of the representative action procedures.

Continuing issues

Representative proceedings similar to those in the Federal Court of Australia have been introduced in the Supreme Courts of Victoria and New South Wales.

Some aspects of practice and procedure relating to representative proceedings in the Federal Court of Australia were considered as part of the ALRC's review of the federal civil justice system in Managing Justice (ALRC Report 89).